“We can build this in two weeks” is how most build-vs-buy decisions start. Six months and $200,000 later, the team is maintaining custom software that does 80% of what the $50/month SaaS product would have done.
I’ve seen this pattern dozens of times: smart engineers underestimate building complexity, ignore maintenance costs, and overestimate how “unique” their requirements are. But I’ve also seen teams waste $100,000/year on enterprise software when a $5,000 internal tool would have worked better.
The question isn’t “can we build this?"—it’s “should we build this?” Here’s how to actually make that decision.
The Real Cost of Building
Most build-vs-buy analyses compare upfront costs:
Buy: $1,000/month SaaS = $12,000/year
Build: 2 engineers × 2 weeks × $150/hour = $12,000
"Building is cheaper!"
This ignores:
Ongoing maintenance: Software doesn’t stay built. Dependencies need updates, bugs need fixes, features need additions. Budget 20-40% of initial development cost per year for maintenance.
Year 1: $12,000 build cost
Year 2: $4,000 maintenance (bug fixes, dependency updates)
Year 3: $6,000 maintenance (feature additions, refactoring)
Year 4: $5,000 maintenance
Year 5: $8,000 maintenance (major refactor as tech debt accumulates)
5-year total: $35,000
SaaS 5-year total: $60,000
So building is still cheaper, right? Not quite.
Opportunity cost: Those 2 weeks of engineering time could have built customer-facing features worth $50,000 in revenue. Every hour spent maintaining internal tools is an hour not spent on your core product.
Hidden complexity: The initial estimate is almost always wrong. What starts as “2 weeks” becomes “4 weeks of development + 2 weeks of QA + 1 week of documentation + ongoing bug fixes.”
Knowledge concentration: If one engineer builds the tool and then leaves, you’re stuck maintaining code nobody understands or paying to rebuild it.
A realistic cost comparison:
Build (5-year total cost of ownership):
Initial development: $12,000 (2 weeks)
Maintenance: $23,000 (ongoing)
Opportunity cost: $30,000 (revenue not built)
Knowledge risk: $15,000 (rebuilding if engineer leaves)
Total: $80,000
Buy (5-year total cost of ownership):
SaaS subscription: $60,000
Integration time: $3,000 (1 week)
Training: $2,000
Total: $65,000
Suddenly buying is 20% cheaper—and that’s before considering features you’d never build yourself (SSO, SOC 2 compliance, mobile apps, integrations with other tools).
When Building Makes Sense
There are legitimate reasons to build:
Your requirements are truly unique. If no existing product solves your problem and never will, you have to build. Examples:
- Industry-specific workflows (manufacturing floor control, lab equipment integration)
- Proprietary algorithms (pricing models, recommendation engines)
- Deep integration with existing systems
But “unique requirements” is overused. Most teams think their needs are special when they’re actually common. Before deciding your requirements are unique, talk to 5 competitors—if they’re all using the same SaaS product, your needs probably aren’t that unique.
Building is your competitive advantage. If the software is your product or core differentiator, build it. Examples:
- A fintech building custom risk models
- A logistics company building route optimization
- A data company building ETL pipelines
If it’s not your core competency, don’t build it. Slack builds chat software. They don’t build their own accounting system—they buy QuickBooks.
No acceptable vendor exists. Sometimes the market gap is real:
- Security/compliance requirements that SaaS can’t meet
- Must run on-premises (air-gapped environments, government)
- No vendor serves your market (too niche, too early)
But even here, consider open-source solutions before building from scratch. Deploying and customizing an open-source tool is often cheaper than building.
You have spare engineering capacity. If your team is at 60% utilization and looking for projects, building internal tools can make sense. But “spare capacity” is rare—most teams are underwater with their roadmap and shouldn’t add more work.
When Buying Makes Sense
Buy when:
It’s not your core competency. Every company needs email, chat, CRM, and accounting software. Unless you’re building those products, buy them.
The SaaS product is “good enough.” You don’t need perfect—you need 80% of the functionality for 20% of the cost. If a $50/month tool solves 80% of your problem, buy it and work around the gaps.
Speed matters more than cost. Building takes months. Buying takes hours. If you need the capability now to unblock revenue or close a deal, buy it.
The vendor invests more than you would. Datadog spends millions on monitoring features, integrations, and uptime. You won’t build anything close for $50,000. Buy the expertise.
Compliance and security matter. SaaS vendors handle SOC 2, GDPR, penetration testing, and security patches. Building this yourself costs 10× more than the subscription.
The Decision Matrix
Here’s a framework that works:
Score each factor 1-5:
Build Score:
[ ] Requirements are unique (1=generic, 5=truly unique)
[ ] Core competitive advantage (1=commodity, 5=differentiator)
[ ] Team has capacity (1=underwater, 5=spare capacity)
[ ] Team has expertise (1=new domain, 5=expert)
[ ] Long-term usage (1=temporary, 5=permanent)
Buy Score:
[ ] Vendor exists with good fit (1=no options, 5=perfect match)
[ ] Speed is critical (1=can wait, 5=need now)
[ ] Vendor adds value beyond features (1=basic, 5=expertise/compliance/integrations)
[ ] Budget allows (1=can't afford, 5=cheap relative to building)
[ ] Low integration complexity (1=major integration, 5=plug and play)
If Build Score > Buy Score + 5: Build
If Buy Score > Build Score + 5: Buy
If scores are close: Start with buy, build later if needed
Hybrid Approach: Start with Buy, Build Later
The safest approach for unclear situations:
Phase 1 (months 1-6): Buy
- Use SaaS product to validate the need
- Learn what features actually matter
- Understand edge cases and requirements
Phase 2 (months 6-12): Evaluate
- If the SaaS works fine, keep using it
- If limitations are painful, gather requirements for building
- Calculate true cost of building vs continuing to buy
Phase 3 (year 2+): Build if justified
- You now understand requirements deeply
- Team has bandwidth allocated
- ROI is clear based on real usage data
This avoids building something you don’t need and gives you real data for the decision.
Example: A client needed a content management system. We started with Contentful ($500/month). After a year, they understood exactly what they needed and built a custom CMS for $40,000. The year of Contentful usage ($6,000) was cheap compared to building the wrong thing.
Hidden Costs of Buying
Buying isn’t free either:
Integration costs. That $50/month tool needs SSO, API integration, data sync, and custom workflows. Budget 1-2 weeks of engineering time for integration.
Vendor lock-in. Migrating from one SaaS to another (or to self-built) is expensive. Exporting data, rebuilding integrations, retraining users—plan for this even if you hope it never happens.
Subscription creep. SaaS costs increase over time—more users, more features, annual price increases. A $1,000/month tool can become $5,000/month in 3 years.
Feature bloat. You’re paying for features you don’t use. Enterprise plans include SSO, advanced analytics, and custom integrations that small teams don’t need.
Trust and control. You’re trusting the vendor to stay in business, not get acquired, not raise prices 10×, and not change features you depend on. This risk is real but often overstated.
Case Studies
Case 1: Build was wrong
A startup built a custom billing system because “our pricing is unique.” Cost: $80,000 over 2 years. Then they discovered Stripe Billing could handle their pricing with a webhook and some custom logic. Migration cost: $5,000. Lesson: talk to the vendor before assuming it won’t work.
Case 2: Build was right
A manufacturing company needed software to control factory floor equipment. No SaaS existed for their specific machinery. They built a custom system for $150,000. It’s been running for 5 years with minimal maintenance. Lesson: truly unique requirements justify building.
Case 3: Buy-then-build worked
A logistics company used Salesforce for 2 years ($24,000). It worked but didn’t fit their workflow. They built a custom CRM for $60,000 based on learnings from Salesforce. They saved $12,000/year ongoing. Lesson: buying first de-risks the decision.
What We Actually Recommend
Our default advice:
Infrastructure and commodity functions: Buy
- Email (Google Workspace, Microsoft 365)
- Chat (Slack, Teams)
- Monitoring (Datadog, New Relic)
- Auth (Auth0, Okta)
- Payments (Stripe, Braintree)
Core product features: Build
- Your differentiated algorithms
- Industry-specific workflows
- Proprietary data models
- Customer-facing features that drive revenue
Internal tools: Start with buy, build if you outgrow it
- CRM (Salesforce → custom as you scale)
- Helpdesk (Zendesk → custom if volume justifies)
- Analytics (Mixpanel → custom data warehouse)
Niche requirements: Open source + customization
- Deploy Metabase instead of building dashboards from scratch
- Use Supabase instead of building auth + database from scratch
- Fork and customize instead of building 100% custom
The teams that make good build-vs-buy decisions:
- Start with a bias toward buying
- Track actual TCO, not just license fees
- Revisit decisions yearly (what made sense at 10 people doesn’t at 100)
- Don’t confuse “we can build it” with “we should build it”
The worst build-vs-buy decisions come from ego (“we’re engineers, we can build anything”) or penny-pinching ("$1,000/month is too expensive”). The best decisions come from realistic cost analysis and understanding opportunity cost.
Build software that makes you unique. Buy everything else.
Need help evaluating build-vs-buy decisions or auditing your current software stack? We can help.